Growing inequality: the war on the poor

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The latest figures for global inequality show a worrying trend. It is a well worn phrase that the ‘rich get richer whilst the poor get poorer’, but in the last few years the extent of the wealth accumulated by the richest people in the world has sky rocketed.

The campaigning charity Oxfam released a report in early 2013 on the crisis of rising inequality across the world. The report highlights the never before seen levels of wealth that are going to the very top of society. The reality of unequal wealth distribution are more stark and revealing than even Occupy managed to capture with their call for a struggle against the 1% . Oxfam’s research indicates that in fact the top 100 wealthiest people earned £240 billion in 2012. They claim;

“The richest 1 percent has increased its income by 60 percent in the last 20 years with the financial crisis accelerating rather than slowing the process” (read full report here)

Even the World Bank acknowledges the growing crisis of wealth distribution; “The top 1% has seen its real income rise by more than 60% over those two decades“.

In the US this has led to the startling fact that the richest 1% now earn 93% of national income.

This video graphically demonstrates the extent of the problem. The conclusions are quite reformist (changing the rules concerning trade) but the problems of unequal trade and control over world resources by a handful of people – mostly in the West – are clear enough.

The levels of global inequality are a symptom of a diseased system that increasingly can only work to serve those with power. Consider this, if austerity around the world was also affecting the capitalist class in terms of a reduction in their wealth then that would make an anticapitalist argument quite hard to sustain – it would indeed appear that “we are all in this together”. Yet the global economic crisis is being used by a privileged elite to enrich themselves even further whilst the rest are made to suffer.

Who are the job creators?

However, some people don’t have a problem with some people getting super rich.

Trickle down theoryModern day neo-liberal economics, which dominates thinking in many countries around the world, argues that it is the wealthy that create jobs and business opportunities. As such they should be freed from taxation and any responsibility for contributing to the social wage and instead be allowed to just get on with the business of making money. This is a version of the “Trickle Down” theory from the 1980s. Trickle down argues that if the richer get richer then they inevitably spend more, buy more goods and services and that creates more demand which will see more jobs.

But as Nick Hanauer argues in a recent Ted talk (which was briefly pulled from their website for being “too partisan”) given the levels of wealth that the top 2% in the US enjoy today it should theoretically lead to record levels of employment. Yet globally the rich are getting richer whilst unemployment is sky rocketing – something must be wrong with the capitalists economic arguments.

The actor Matt Damon joked about this very idea in 2006 when President George W Bush was implementing massive tax cuts for the super rich – “I didn’t go and start a small business with my tax breaks…”

The economic crisis around the world is being used by the capitalist class to enrich themselves, to shore up their own wealth and power, and to inflict the cost of the crisis onto the poor. In countries badly affected by the crisis they hope that a combination of charity welfare and violent paramilitarised policing can keep the populace down long enough for the economy to start to pick up again by 2018. Interestingly enough, the powers that be feel very threatened by more radical forms of mutual solidarity. Occupy Sandy was a relief effort organised by progressive campaigners which was praised by Mayor Bloomberg as he sent in the police to shut it down. The message? Aid from the US government or the Church – good; aid from progressive left wing solidarity groups – bad.

The “undeserving poor” in Britain

benefits-scrounger-frontpage-expressThe ideological attack being waged now in Britain is a powerful one. The government is blaming those on welfare benefits, claiming to be speaking on behalf of “hard working” British people who are sick of “workshy” people who have chosen to live on benefits for “lifestyle reasons”.

This is all smoke and mirrors to distract from the real problem. The majority of money spent on welfare in Britain goes towards pensions. The amount that goes on benefits is around 30% of the welfare budget. Yet now media propaganda has left many people thinking that fraudulent benefit claims make up around 27% of a all claims. In reality is it 0.7%.

A major plank of the governments strategy today rests on the notion that some people have been living it large for the last few years. That some people have got lazy on over-generous welfare hand outs. That their houses are too big, that they have enjoyed the finer things in life when others who have been working are missing out. It is a cynical attempt to turn workers in employment against workers who are unemployed.

It can only work if they distract attention away from the top of society and how their wealth is increasing and an alarming rate. They have to divert attention away from the mechanisms that are enriching the 1% and concentrate on the handful of sensationalist cases they can find that put the blame on the poor. The notion of the undeserving poor is alive and well today in Britain.

Break the consensus

ha-joon chang trickle downSo how did it get this bad? Without a strong movement of the poor and working people who are threatening the power of the rich, the global elites feel they can get away with anything. With the collapse of “communism” the policy makers and super rich really feel that there is no credible alternative to their system. They don’t feel threatened so they let rip with their neo-liberal market system. Instead of the markets reaching a healthy level where everyone benefits, as some argue, they instead create a social machine where the wealth is distributed upwards. In times of crisis capitalists cut wages and sack workers (making the remaining labour force work harder) whilst demanding more breaks from central government to help them out. Massive companies, like Tesco in the UK, subsidize their huge profits by having a workforce made up largely of part time workers who have to apply for welfare benefits just to supplement their meager incomes. The government classifies these people as “in work” which helps them massage the unemployment data which is why today a more useful statistic, though one that is harder to gauge, is how many people are underemployed.

Inevitably some sections of the middle class can also benefit from capitalist economics. They benefit just enough to create the illusion that the whole system is working, that it is only a few lazy malcontents who don’t have the energy and vision to take advantage of the rising tide of wealth. But this myth also obscures from the majority of the middle classes that in this system their ‘benefits’ are only relative, that they come at the expense of the billions of impoverished people and are just a drop in the ocean of the wealth of the elites.

The Oxfam report’s conclusion that the wealth of a 100 people could cure global poverty is a great insight into the depth of the problem today. But there is more to it than simple wealth redistribution. Capitalism is a system where wealth is allowed to accumulate in the hands of the capitalists – always at the expense of the working people and the poor.

What kind of mechanisms are in place now to ensure the flow of money from poor to rich?

– Government bailouts for the financial sector
– Tax cuts for the rich
– Greater financialisation of the economy (the rich can benefit from financial speculation)
– Workfare schemes – unpaid labour for corporations
– Cuts to welfare and benefits, increasing the pensionable age and freeze public sector wages
– Marketisation of previously publicly run services (poor people pay for what was once free)

In other words they are rich because we are poor.

The burden of responsibility on who will pay for public services, for welfare and for the social wage increasingly falls on the poor and it comes with more and more string attached. When the bank bailouts happened the only demand on the bankers was that they use the money to start lending to businesses again (something that is still barely happening). We can’t end inequality until the system that produces it is defeated and replaced by one of mutual solidarity, cooperation and democratic control over the economy.

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